CAIRO: Egypt’s benchmark EGX 30 was down 8.92 percent while the broader EGX 100 fell 8.95 percent at the end of the first trading session since Jan. 27.
Only five firms made gains on Wednesday, including Sinai Cement, Misr Conditioning (Miraco), Cairo Investment and Real Estate Development, Belton Financial Holding and Alexandria New Medical Center.
The top five losers included Orascom Construction Industries, Al Arafa for Investment and Consultancies, Naeem Holding, El Kahera Housing and Eastern Tobacco.
Orascom Telecom, the most active stock of the day in terms of trading, was in the green for much of the session but ended in the negative.
Acting Exchange Chairman Mohamed Abdel Salam told a press conference that the stock market drop was “less than we expected,” adding that he had complete confidence in investors and the market.
Given the circuit breakers and down-limits in place on stocks and indices, he added, it was easy to calculate the extent of possible drops. Strict measures introduced by the exchange meant to mitigate the effects of a wide selloff would be in place until further study by the Egyptian Financial Supervisory Authority.
"We will not shut down the stock exchange again," Abdel Salam confirmed.
Egypt’s stock market was on a slightly upward trend when it resumed after a half-hour suspension for falling 10 percent in the first minutes of trading.
The EGX 30 opened at 5,645.52 points and plunged to a low of 5,085.63 points in mere minutes as major shares fell 10 percent, triggering a circuit breaker that halted trading for half an hour. It closed the day at 5,142 points.
Karim Helal, Group CEO of CI Capital Holding, described the performance as “quite good considering the circumstances and the prophets of doom” that had been anticipating a complete collapse.
Volume was small, however, at around LE 380 million, Helel told Daily News Egypt, with some orders still pending.
Orascom Construction Industries, Commercial International Bank, EFG-Hermes and Telecom Egypt all fell by the 10 percent limit for individual stocks.
Back again
Upon resuming trade after the half-hour suspension, stocks began recovering as the EGX 30 reached 8.7 percent by midday.
Shares in Orascom Telecom traded up as much as 7 percent on Wednesday, Reuters reported. Only a handful of stocks were trading above a limit-down level of 10 percent.
Sinai Cement gained after CI Capital said shares offered "unquestionably" the highest dividend yield in its coverage universe, if not in the whole market, and recommended investors to buy the stock.
Helal cited the pros and cons of down-limits and circuit-breakers, telling DNE that essentially they “prolong downward pressure” on the market.
“Buying power will want to wait until prices reach the bottom or near-bottom level,” Helal said, meaning that some investors might be waiting to buy into the market.
CI Capital ended with a 14 percent market share, and the firm’s brokers ended up being net buyers.
“Tomorrow will probably be more of the same,” Helal predicted.
Egyptian were net buyers on Wednesday, with a surplus of LE 341 million, buying LE 4.6 billion in stocks and bonds and selling to the tune of LE 4.3 billion.
Foreign investors were net sellers with a difference of LE 342 million, selling LE 536 million and buying LE 194.8 million. Totals trading values equaled LE 371.24 million in stocks and about LE 10,000 in bonds.
Institutions dominated the session, accounting for 97 percent of trade, buying LE 4.7 billion and selling LE 4.7 billion.
Individual traders sold LE 158 million and bought LE 126 million.
Abdel Salam announced the creation of a new fund called “Egypt, The Future” where Egyptians and non-Egyptians can invest as little as LE 10, inspired by calls from the youth and Facebook initiatives to help support the stock market.
Suspended stocks
Trading on 46 stocks was suspended for the companies’ failure to fully disclose their financial standings, which, after the long market closure, “needed clarification for investors regarding the extent of the impact on their finances.”
Trading would resume on companies who have fulfilled financial disclosure requirements.
The heads of several of listed companies were facing investigations while others were mired in court cases over land disputes, squandering public money and corruption charges. However, Abdel Salam said the reason these shares were suspended was strictly due to financial disclosure, adding that “there are no issues with the share itself trading just because one person is being investigated.”
Trading on Ezz Steel was suspended until its ownership and financial position were clarified, the exchange said in an emailed statement. Chairman Ahmed Ezz was being investigated for graft and has been detained since Feb. 17 pending trial on suspicion of squandering public funds, Reuters reported.
Amer Group, Heliopolis Housing, Mokhtar Ibrahim and National Societe Generale Bank (NSGB) were also not allowed to trade.
Abdel Salam expected the bourse to get back on track and price fluctuations to ease as time went by.
Reacting to concerns about the bourse’s reopening before corruption charges that have marked some traded companies have been legally dealt with, Abdel Salam explained that it is not fair for the bourse to remain closed as investors have every right to take their money out, and pointed out that it would take too long to wait for court decisions anyway.
“People need their cash that has been locked in the market for this whole time,” he said.
Egypt’s stock market last traded on Jan. 27 after falling 16 percent and losing around $12 billion in two days, the second biggest drop in its history.
Immediately after ousted president Hosni Mubarak stepped down, the market was expected to reopen to a certain level of optimism. However, it was kept closed after the sudden closure of banks due to workers’ strikes. Since then the reason for its closure has been vague, ranging from fears of economic repercussions, to protests by smaller retail investors, to cabinet reshuffles.
MSCI warned Egypt it risked exclusion from its emerging markets index if the exchange did not reopen by March 24.
After accepting former chairman Khaled Serry Siam’s resignation, Abdel Salam was brought in to oversee the exchange for six months while simultaneously staying on as head of the Misr for Central Clearing, Depository and Registry (MCDR).
The Egyptian pound fell to a six-week low and Egyptian global depository receipts traded in London also slipped, according to Reuters. –Additional reporting by Daily News Egypt’s Amr Ramadan.
Finance Minister Samir Radwan with Abdel Salam and Helal at the reopening of the stock market.
